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CMA Final · Indirect Tax Laws and Practice · Accounts and Records

Meridian Components Ltd, a registered person, failed to account for certain goods in its records as required by Section 35(1), and the matter is not covered by clause (h) of Section 17(5). What can the proper officer do under Section 35(6) of the CGST Act?

The proper officer determines the tax payable on the unaccounted goods as if the registered person had supplied them. The determination follows Section 73, Section 74 or Section 74A as the case may be, applied with necessary changes, subject to Section 17(5)(h).

  1. AOnly impose a penalty, with no tax determination
  2. BDetermine tax on the unaccounted goods as if supplied by the person, applying Section 73 or 74 or 74A as the case may beCorrect
  3. CCancel the registration with immediate effect without determining tax
  4. DRequire the person to reverse input tax credit on all stock held

Explanation

Section 35(6) says that where goods or services are not accounted for per Section 35(1), the proper officer determines the tax payable on them as if they had been supplied by the person. Sections 73 or 74 or 74A apply mutatis mutandis. Penalty-only or cancellation options do not reflect this provision.

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